1, products with functions established at lower purchase cost,
2, the same price is more valuable.
Three main ways to obtain product differentiation:
(A) functional innovation
This kind of innovation has the ability to meet the demand that has never appeared before. For example, Edwin Land invented a real-time photographic imaging technology, which met people's demand of seeing photos immediately after taking photos, so Polaroid appeared.
The competitive differentiation advantage of functional innovation depends on the protection of patent rights or trade secrets, otherwise it will be copied soon and the market products will change from differentiation to non-differentiation. Polaroid Company keeps inventing and developing real-time imaging technology and applying for patent protection, so as to maintain legal technology monopoly and differentiated advantages.
Improve performance
Compared with functional innovation, the second way is to improve product performance or service.
(3) tailor-made
This is the highest form of product differentiation. According to the different needs of each group or even everyone, tailor-made product production can meet the needs of customers to the greatest extent. Case 4: Caterpillar is a supplier of construction equipment. Its products are not much different from competitors' products, but it pays attention to different demand details and adopts tailor-made methods:
1, the same equipment, it provides more molds than competitors, in order to give consumers more choices and more detailed needs to meet.
2. The main pole of equipment design is durability, so as to further distinguish it from competitors and raise the price. The reason is that the delay of work and time caused by high equipment wear and tear is more expensive than the extra money that consumers pay for Caterpillar durable equipment.
3. No matter how durable the equipment is, it will be damaged, so Carerpiller has a huge differentiation advantage compared with its competitors.
On the world marketing stage, there has been a higher development form of "tailor-made", and the real differentiation comes from two sources:
1 is to find the customer's demand through market research and produce corresponding products to meet it, which is demand determinism.
2, is to invent brand-new products, create new market demand and meet it, that is, creative determinism.
Both can produce differentiated advantages, but different determinism will lead to different decisions.
In order to have a clear understanding of the above two viewpoints, we must combine the concepts of risk and return. That is to say, in creative determinism, a new product can be invented without doing market research at all. According to historical experience and statistics, the success rate of new products is less than 10%, which is risky. But once successful, it will create a huge new demand market and become a leader. Products designed for demand are more easily accepted by the market because they are developed based on market research, but they are less likely to become revolutionary products in the market.